Richard Tsao has had his fair share of interesting stories about China. Tsao, who headed up Ubisoft's Chengdu office, will be leaving China for personal reasons; but even as he leaves the Middle Kingdom, Tsao says China's game industry is still the place to be.

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In 2007, Tsao started Ubisoft's Chengdu office with the goal to create global quality online games that launch first in Asia, as well as to create a low cost co-production solution to help with Ubisoft's global productions. Tsao has overseen projects involving games such as Scott Pilgrim vs. The World: The Game and Assassin's Creed: Black Flag. Kotaku had a chance to talk with Tsao to get some of his insights and thoughts about the Chinese gaming industry.

Over the course of Tsao's tenure at Ubisoft Chengdu, he's watched the city turn into a hotbed for game development.

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"Gameloft was the first major international game company in Chengdu, established in 2005. Ubisoft was the second," said Tsao. "Today, there are over 200 game companies employing over 30,000 people in Chengdu, many of them now focused on mobile game development."

Tsao, an American, was hit with a few barriers when he started working in China. Language barriers aside, there were also cultural difficulties. The issues of interpersonal relationships were more pronounced in China, said Tsao. These issues made it harder to get work done—because employees are so concerned with image, they tend to provide management with lots of undeserved deference. Tsao said it also created issues with self starters, as employees wouldn't start projects by themselves in fear of showing "disrespect" to their bosses or "losing face" when they get their project canceled.

"The boss is always right, so do exactly what he/she asks; this naturally leads to hierarchical management even when you don't want it," said Tsao. "No one ever gives suggestions or feedback to higher ups without having a good established relationship, and when they do so, they do it as diplomatically as possible (or even lie) so as not to lose face for either themselves or their boss."

Cultural issues, Tsao says, are only small issues when working in China's video game industry. Even political issues seem small compared to the vast growth that China is facing. However, while most people are optimistic for China's game industry, Tsao is cautious. He's positive, but cautious.

"Small game companies won’t be able to keep up with Western creativity and quality."

Citing the industry's extreme growth over the last 10 years, Tsao says the easy money might be changing soon as companies move on from making lots of games and jumping from trend to trend to finally creating more creative and higher quality games.

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"Now creativity and quality is becoming the major selling point for future games. There will be lots of small game companies that will shut down in the next 5 years in China, as they won't be able to keep up with Western creativity and quality," says Tsao. "Then there will be consolidation, as those who have been most successful in making short-term money will buy up struggling studios in a bid to increase their ability to have creative and quality talent."

Tsao predicts that two major Chinese players will rise above the rest of the Chinese gaming companies. NetEase, with its partnerships with top AAA developers such as Blizzard, and Tencent, with itss acquisitions of Western studios, might just take over China's gaming industry. He says that while the two are the breakouts among the pack, he thinks Tencent will be the one that will reign supreme.

Tencent has purchased stakes in Western companies such as Riot and Epic and is currently dominating in China through their chat platforms, QQ and WeChat. Tencent is also partnering with Activision and Capcom to release Call of Duty Online and Monster Hunter Online in China. Tencent, through their stake in Riot games, also operates League of Legends in China.

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"Tencent is the one to watch. With all their money, they are investing on all 3 fronts: a) in-house development of China talent (through their own studios or by acquisitions), which they know will take at least another 5 - 10 years to possibly be competitive globally; b) acquiring Western studios and trying to teach them about China's game market; and c) partnering with top game developers and operating their games in China."

Overall, Tsao is optimistic about the Chinese gaming industry. He says that the studio he started in Chengdu might one day be 100 percent Chinese-run. He's also willing to bet that there will be a Chinese company that can come out and rival the creativity of a Western or Japanese company such as Nintendo in the future, citing the number of returning Chinese with Western experience and Western developers looking for work in China.

"In time, China will catch up."

Tsao is leaving China: today marks his last day at Ubisoft Chengdu. However, that doesn’t mean Tsao won't be interested in heading back to China. If the right job comes along, he might just relocate back. For the long term, he says he's interested in creating a US-based company with a major office in China.

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"I strongly believe there are strengths in Western game development habits, and similar strengths in Chinese game development. By combining these strengths, I think better and larger-scale games can be made," said Tsao. "In time, China will catch up. I am hoping Ubisoft Chengdu and the hundreds of alumni that came from it will be part of future wave of game makers that will create the "Blizzard of China."